Bangalore District Court
Anand Kotreshwar Sithale vs Enforcement Officer Epfo on 22 November, 2025
1 Crl.Apl.No.1805/2024 JUDGMENT
KABC010282362024
IN THE COURT OF LXIX ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE (CCH 70)
Present:
Smt. Shirin Javeed Ansari, B.A.,LL.B (Hon`s) LL.M.,
LXIX Additional City Civil and Sessions Judge,
Bengaluru. (CCH70)
Dated this the 22nd day of November, 2025
Crl.A.No.1805/2024
Appellant: Sri Anand Kotreshwar Sithale
s/o Kotreshwar Sithale
Aged about 45 years
Director
No.007, SLV Rajdriva Apt
19th Main, 5th Block
38th Cross, Prakruthi Layout
HBR Layout
Bangalore North
Kalyananaar
Bangalore-560 043
(Smt.Deepa.J, Advocate for appellant)
-V/s-
Respondent: The Enforcement Officer
Employees Provident Fund Organisation,
Regional Office,
Koramangala
Bhavishyanidhi Bhavan,
Annapurneshwari Complex,
6th Main, Singasandra,
2 Crl.Apl.No.1805/2024 JUDGMENT
Bengaluru- 560068.
represented by:
Sri Kumar Prabash Chandra
Enforcement Officer
(Sri Harsha.V., Advocate for
respondent)
JUDGMENT
The present appeal arises out of the judgment of conviction and order of sentence dated 15.10.2024 rendered by the Special Court for Economic Offences, Bengaluru in C.C. No.116/2024, whereby the appellant herein along with other accused has been convicted for the offence punishable under Section 14(1B) read with Section 14A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as "the Act").
2. Being aggrieved by the impugned judgment and conviction, the appellant/accused No.3 has preferred the present appeal under Section 374(3) of the Code of Criminal Procedure seeking to set aside the same.
3. The accused No.3 in CC No.116/2024 before the trial court has preferred the instant appeal against the complainant. The appellant and respondent are hereby 3 Crl.Apl.No.1805/2024 JUDGMENT assigned with their original ranks before the trial court i.e., the appellant as accused No.3 and respondent as complainant in CC No.116/2024 in the instant discussion for the purpose of brevity and convenience to avoid the confusion and perplexity.
4. The genesis of prosecution lies in the statutory obligations imposed upon employers and persons in charge of establishments covered under the Act, to secure the social and economic welfare of employees through timely remittance of provident fund and allied statutory contributions. The prosecution case, in substance, was that Accused No.1 establishment, being a covered establishment under the Act, defaulted in payment of statutory employer contributions towards Insurance Fund and Administrative Charges for the period December 2013 to February 2014, and that Accused Nos.2 to 5, including the present appellant, were statutorily and legally responsible for the said omissions.
5. Being aggrieved by the findings of guilt, the conviction and the sentence, Accused No.3 has preferred 4 Crl.Apl.No.1805/2024 JUDGMENT the instant appeal against the respondent who was the complainant before the trial court on the following:
GROUNDS OF APPLEAL
a) The judgment and order of sentence passed by the Special Court is opposed to law and evidence on record, hence, the order of conviction and sentence is liable to be set aside by this Court.
b) The trial court erred in taking cognizance of the offenses under Section 14(1A) & 14A of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, without proper evidence or material to sustain the allegations made in the complaint and the very taking of cognizance and consequential proceedings against the appellant is opposed to law and the evidence on record, consequently the order of conviction and sentence is liable to be set aside by this Court.
c) The appellant submits that there has been failure to appreciate by the trial court that, the appellant was merely a director and was not responsible for the day-to-day 5 Crl.Apl.No.1805/2024 JUDGMENT affairs of the accused No.1 company during his tenure. Furthermore, the appellant had resigned from the company on 22.03.2012 and is not connected to the company's operations or financial matters in any manner. Such being the case The Special Court Holding in it's Judgment that the Appellant/Accused No.3 has not appeared during the enquiry initiated by the complainant authority U/s 7A of the EPF and MP act despite notice being not served and the appellant is not residing in the address mentioned in the cause title of the complaint filed by the respondent under section 200 of Cr.P.C (Ex.P1). It is submitted that while drawing the inference the trial Court has erroneously considered that the appellant has not challenged the enquiry order dated 31.10.2017 U/s 7A, when it is very much relevant that the Accused NO.3/Appellant was no longer a director of the company and as such the accused was unaware of any such proceedings. Hence, the impugned order deserves to be set aside by this Court.
d) The Trial Court has erred and passed a 6 Crl.Apl.No.1805/2024 JUDGMENT cyclostyle order holding the appellant responsible for the actions of the company even after the appellant had resigned from the company and was no longer concerned with the happenings of the company whatsoever. The Appellant/ Accused No.3 had resigned from the directorship of Accused No.1 Company on 22.03.2012 much prior to the alleged period of due date of remittance of Employees Deposit Linked Insurance Fund amount for the alleged months as per Ex.pl. This resignation was duly communicated to the company, accepted by the company, and updated in the Registrar of Companies (ROC) records. Furthermore, the appellant had also informed the respondent authority of this resignation much prior to filing of the complaint. Despite these facts being on record, the Trial Court failed to properly appreciate the evidence has erroneously convicted the appellant.
Consequently, the allegations against the appellant unsustainable in law, and the conviction order is liable to be set aside.
e) The trial Court has erred in considering and 7 Crl.Apl.No.1805/2024 JUDGMENT marking Exhibit P-2 to P-8 has been addressed to the accused No.3 when the same was addressed to the accused no.1 company. The Appellant was not a director of the company as he resigned from the company on 22.03.2012, and no Notices were served to the appellant, moreover the respondent authority has failed to produce any postal receipt as a proof of such notice being addressed to the Appellant/Accused No.3. Without there being any material of service to the appellant the trial Court has permitted the exhibits of track consignment to be marked despite objections and has erroneously considered Exhibit P-2 to 8, as such the impugned judgment is bad at law and needs to be interfered by this Court. Thus even as per Section 27 of the General clauses Act, the address of the appellant is different as per Ex.P1 and hence the court cannot draw the presumption of deemed service of notices to appellant.
f) The trial court failed to appreciate the various contentions raised by the appellant and lack of sufficient material produced by 8 Crl.Apl.No.1805/2024 JUDGMENT the Respondent authority to sustain the allegations made in the complaint and the charges levelled against the appellant. Hence, the same deserves to be set aside by this Court.
g) The order of conviction is bad at law as far as the appellant is concerned. Further, the trial court has failed to appreciate the evidence of the prosecution, more particularly the cross examination of PW-
1, which clearly reveals that the complainant/Respondent authority has
failed to produce any material to sustain the charges levelled against the appellant/ Accused No.3. In the absence of material to sustain the charges levelled against the accused/appellant, the order of conviction is bad at law and facts. Hence, the same deserves to be set aside by this Court.
h) The order of conviction is bad at law for non-production of the vital material by the prosecution to show production of books of accounts, and non-examination of account statements of accused No.1 establishment, list of employees with respect of the contribution of the employers and its 9 Crl.Apl.No.1805/2024 JUDGMENT details. The non-production of statement of accounts of the employee, passbook, and non-examination of any employees, non examination of the person who has dealt with these files relating to the Employees and employers' contribution to EPF fund by the respondent authority. Due to the non production and non-examination of these vital documents and witnesses, the trial ought to have drawn adverse inference against the prosecution. Hence, the order of conviction is bad at law and evidence.
i) There has been failure to appreciate that, the prosecution has failed to produce the best evidence, and they have also failed to prove the alleged charges against the appellant beyond reasonable doubt by producing cogent and unimpeachable evidence to prove the alleged charges. In the absence of any cogent and unimpeachable evidence, either oral or documentary evidence, the order of conviction against the appellant is bad at law and is liable to be set aside.
j) The trial court has wrongly drawn inference from section 305 (6) of Cr.P.C and 10 Crl.Apl.No.1805/2024 JUDGMENT concluded that the Appellant/ Accused No.3 is a person responsible for the Accused No. 1 along with other Directors. It is a settled position of law that, No one is compelled to represent company and to defend in the court of law, and such being the case the reason mentioned by the trial court in the judgment, which runs contrary to the judgments of the Hon'ble High Court of Karnataka and Hon'ble Apex Court. Hence, the order of conviction passed in by the trial court is totally opposed to the law and is liable to be set aside.
k) The trial court as failed to notice, in the absence of any material to prove the alleged charges and has proceeded to pass order of conviction against the appellant holding erroneously that, the complainant has discharged the burden of proof beyond all reasonable doubts, and proceeded to hold accused No.2 as guilty U/s.14(1B) R/ W Section 14A of EPFMP Act in so far as 33.3% of the defaulted contribution amount when the very basis, Muster Roll of Employees of Accused No.1 and EPF 11 Crl.Apl.No.1805/2024 JUDGMENT Account statements were not furnished to substantiate the allegations made in the complaint. Even otherwise the Respondent authority has failed to establish any connection between the accused No.1 company and the appellant as the appellant is no longer the director, and even during the relevant point of time the appellant was not the one responsible for the day-to-day activities of the company. The trial Court has failed to appreciate the specific contents in the exhibits, where it is categorically specified that the details of the directors in and the particulars of the person in charge and responsible for conduct of business of the establishment. In that, regard the impugned judgment is bad at law and needs to be interfered by this Court.
l) The Appellant has engaged his Advocate in the trial court only for himself and the appellant is not a representative of the company. The Accused No. 1 Company has not engaged any advocate. However, the Trial Court instead of placing the Accused No.1 establishment a juristic person and 12 Crl.Apl.No.1805/2024 JUDGMENT an independent entity as an ex-Parte, on erroneous consideration has held the Accused No.1 establishment is being managed by accused No.2 to 5 and passed the impugned order making the Appellant responsible for the conduct of the Accused No. 1 Company which is arbitrary and illegal. Hence the same needs to be set aside by this Hon'ble Court.
m) The Trial Court has not properly appreciated the relevant judgments relied upon by the appellant, the Trial court has erroneously made the appellant vicariously liable for the activities of the company, even though the appellant is no longer the Director or was responsible for its day to day activities such as paying the employee contribution amount, hence the same is bad at law and needs to be interfered by this Court.
n) The Trial Court has failed to notice the very proceedings against the accused persons and more particularly, against the appellant is bad at law as the Accused No.1 which is an establishment which is required to make EPF contribution, and 13 Crl.Apl.No.1805/2024 JUDGMENT the said company is a juristic person and has been strike off even prior to filing of a complaint by the respondent before the trial Court. Such being the case, when the company is being strike off before filing of a complaint and very taking cognizance against strike off company and its erstwhile directors is bad at law and same is liable to be set aside.
Hence, under the said facts and circumstances, the appellant/accused pray before this court to call for records from the trial court, set aside the impugned judgment conviction and sentence passed by Trial Court in CC No.116/2024 dated 15.10.2024 and acquit the accused in the interest of justice.
6. Heard. The entire original records of the Trial Court have been summoned and examined.
7. On the basis of the rival submissions and the record, the following points arise for consideration of this appellate Court:
(1) Whether the judgment of conviction 14 Crl.Apl.No.1805/2024 JUDGMENT warrants interference in law, facts or discretion?
(2) What order?
8. My findings to the above points are as under:
Point No.1 : In the Negative
Point No.2 : As per final
order for the following:
REASONS
9. Point No.1:-- The appellant primarily
canvassed that he had ceased to be the Director of the company on 22.03.2012, and therefore could not be fastened with criminal liability for defaults allegedly committed after his resignation. It is also urged that there was no proper service of notice, no proof of responsibility and no establishment of mens rea.
10. At the very threshold, it is imperative to observe that laws relating to social security legislation like the EPF Act operate not merely in the realm of private commercial obligations, but within the larger constitutional vision embodied in Articles 38, 41, 43 and 43A of the 15 Crl.Apl.No.1805/2024 JUDGMENT Constitution of India, which mandate the State to secure a just social order and humane conditions of labour.
11. The offence under Section 14(1B) is not a simple regulatory lapse but constitutes a breach of social trust reposed by the lawmaker upon those who control industrial and commercial establishments.
12. The legislative design of Section 14A of the Act creates a principle of deemed culpability, whereby persons who are in charge of and responsible to a company for the conduct of its business are treated as offenders, unless they demonstrate strict compliance and due diligence.
13. In Srikantadatta Narasimharaja Wodiyar v. Enforcement Officer, Mysuru, (1993) 3 SCC 217, the Hon'ble Supreme Court unequivocally held that Directors and persons who control the affairs of the establishment carry strict statutory responsibility, and such liability cannot be evaded on mere technical pleas.
14. The plea of resignation taken by the appellant cannot be examined in isolation. Jurisprudentially, 16 Crl.Apl.No.1805/2024 JUDGMENT resignation from the Board of Directors is not a purely private corporate act but a statutorily regulated event, particularly when the company is governed by welfare legislation.
15. Para 36A of the EPF Scheme, 1952 casts a clear statutory obligation not merely on the company but also on the outgoing persons in control to intimate the Regional Provident Fund Commissioner about the change in ownership or management.
16. The appellant has utterly failed to establish that such mandatory statutory intimation was either issued or received by the complainant authority.
17. The defence founded on Form-32 loses all significance in absence of proof of communication to the EPFO. The law under the EPF Act does not recognize passive resignation as a defence; it recognizes only informed resignation duly communicated to the statutory authority.
18. The doctrine of vicarious criminal liability, as 17 Crl.Apl.No.1805/2024 JUDGMENT incorporated under Section 14A, is not alien to criminal jurisprudence. It is a deliberate legislative choice made to prevent evasion of responsibility by placing shells of corporate structures.
19. In State of Karnataka v. Pratap Chand, AIR 1981 SC 872, it was held that where a statute creates liability, the Court is not required to search for traditional mens rea when the statute itself indicates strict liability.
20. The appellant's contention that the company had been "struck off" is also of no legal consequence. The liabilities under the Act crystallise at the time of default and such liabilities are not obliterated by subsequent corporate death.
21. The Trial Court was legally justified in drawing an adverse inference from the failure of the appellant to challenge the order passed under Section 7A of the Act. Silence, in law, under such circumstances, amounts to acceptance.
22. Default under the EPF Act is treated as a 18 Crl.Apl.No.1805/2024 JUDGMENT continuing offence, by virtue of Section 472 of Cr.P.C., as consistently affirmed in judicial precedents, thereby neutralising the argument of limitation.
23. The appellate jurisdiction is corrective, not substitutive. An appellate court does not lightly disturb findings of fact unless they shock judicial conscience. The Trial Court's findings are coherent, logical and rooted in legally admissible evidence.
24. The appellant has sought to wear the mantle of an "innocent former director", but the law does not reward inaction or silence when statutory duties demand affirmative compliance.
25. The theory of corporate criminal responsibility has evolved as a response to the realities of modern economic offences where harm is diffused and victims are the silent labour class. EPF defaults directly affect the dignity and security of workmen.
26. The ratio laid down in T.A. Varghese v. M/s. Rambahadur Thakur Ltd. has been duly examined, and 19 Crl.Apl.No.1805/2024 JUDGMENT this Court finds that the factual matrix of the present case does not attract the benefit of that decision to the appellant.
27. The Trial Court's reliance on Ex.P-3 (Form 5-A), Ex.P-4 (7A order) and oral testimony of PW-1 is legally sound and based on settled principles of appreciation of evidence.
28. The argument relating to improper service of notices loses its force when the accused admittedly failed to intimate his address change as required under the statutory framework, attracting presumption under Section 114 of the Indian Evidence Act.
29. In criminal jurisprudence, presumption of innocence is a cardinal principle; however, in regulatory offences under welfare statutes, the legislature consciously shifts the evidentiary burden once foundational facts are established. The appellant has failed to discharge this shifted burden. This Court, therefore, finds no perversity, illegality or miscarriage of justice in the impugned 20 Crl.Apl.No.1805/2024 JUDGMENT judgment. The impugned judgment represents a correct application of law, proper appreciation of evidence and faithful adherence to the object of the EPF Act. Any interference by this Court would amount to defeating the legislative intent and rendering the safeguards of labour welfare illusory. Accordingly, this Court answers Point No.1 in the Negative.
30. Point No.2: In view of the reasons mentioned above and the findings arrived at on Point No.1, I proceed to pass the following:
ORDER The Criminal Appeal filed by the appellant/accused No.3 under Section 374(3) Cr.P.C. is hereby dismissed.
The judgment of conviction and order on sentence dated 15.10.2024 passed by the Presiding Officer, Special Court for Economic Offences, Bengaluru, in C.C. No.116/2024, are hereby confirmed in its entirety.
The appellant shall comply with the sentence imposed by the Trial Court.21 Crl.Apl.No.1805/2024 JUDGMENT
Office is hereby directed to send back the records to the trial court along with a copy of this judgment.
(Dictated to Stenographer Grade-I directly on computer, typed by him, revised and corrected by me and then pronounced in open court on this the 22nd day of November, 2025) SHIRIN JAVEED Digitally signed by SHIRIN JAVEED ANSARI ANSARI Date: 2025.11.26 15:24:46 +0530 (Shirin Javeed Ansari) LXIX Addl.C.C. & Sessions Judge, Bengaluru.